Microsoft Corp. needs to make a stronger case for U.K. schools to upgrade to Windows Vista and Office 2007 as neither product contains essential new features, according to a report from a British educational advisory group.

The report, released Wednesday by the British Education Communications and Technology Association (BECTA), contains strongly-worded concerns over Microsoft’s new flagship products, both due for general release at the end of this month.

The report also struck at the core of what Microsoft has billed as its biggest improvements with the software, such as security. The report says the most stable version of Windows XP came almost three years after the product’s initial release, and advised that early deployments of Vista would be “high risk.”

“It seems reasonable therefore not to deploy Vista until it has a demonstrably stable and secure track record,” the report states.

The BECTA report will be used by 25,000 schools throughout the U.K., using about 2 million computers, most of which use Microsoft software. Neither Microsoft nor BECTA officials would say how much revenue the schools generate for Microsoft in annual licensing fees.

“We need to see a persuasive business case for the level of investment needed to deploy the products,” said Tom McMullan, a consultant for BECTA. “What we are saying in the short-term is that the case has not been made.”

A final report will be released in January 2008 after further talks with Microsoft and competing vendors, McMullan said.

The report digs deeply into Vista and Office 2007’s features. It found 27 percent of Vista’s added features were available without upgrading from XP, such as the new Internet Explorer 7 browser and Windows Media Player, both of which can be downloaded free for Windows XP.

Of 176 new features identified in Office 2007, none were “must-have” for education institutions, and most are aimed at businesses, the study said.

The report comes as thousands of educators gather in London this week for the British Education and Training Technology conference.

Steve Beswick, Microsoft’s director of education in the U.K., said Vista and Office are receiving positive feedback from teachers and students at the show.

As for as the report, “Clearly, we would like to think it could have been better,” Beswick said. “We feel very confident that once customers see the technology and evaluate it correctly, upgrades will happen.”

Over the long-term, McMullan said, schools will inevitably migrate to Vista and Office 2007. In the meantime the report calls for improvements, particularly in the area of file compatibility.

Microsoft should put native support for the OpenDocument (ODF) format in Office 2007 by mid-year, the report said. ODF is used by competing office suites such as StarOffice or OpenOffice.org.

Microsoft is supporting a project to build a plug-in that will translate OpenXML — the default file format for Office 2007 — to ODF, but it hasn’t been released yet. Schools shouldn’t deploy Office 2007 until it will interoperate with products such as OpenOffice.org, the report says.

“Using the default file format of Microsoft Office 2007 therefore has the potential to exacerbate ‘digital divide’ issues,” according to the report.

Over time, the report said, online productivity software by Google Inc. could become a major competitor to Office, but for now too many security and usability issues remain with Web-based suites.